The Securities and Exchange Board of India (Sebi) on Tuesday issued new norms for public issuance of debt securities under which such offers have to be of minimum Rs. 100 crore, while issuers would need to make additional disclosures and attain at least 75 per cent subscription.

Market regulator Sebi said that the entities coming out with public issue of NCDs (non-convertible debentures) would have to provide granular disclosures in their offer document, with regards to the "object of the issue".

Also, an entity has to make additional disclosures in the offer document about details of money utilised from previous issues of the issuer as well as group companies.

The new norms would be applicable for the draft offer document for issuance of debt securities filed with the stock exchanges on or after July 16.

The market watchdog said that the minimum subscription for public issue of debt securities has to be 75 per cent of the base issue size for both NBFCs (non-banking financial companies) and non-NBFC issuers.

Further, if the issuer does not receive minimum subscription of its base issue size (75 per cent), the entire application money would be refunded within 12 days from the date of the closure of the issue.

In the event of a delay by the issuer in making the refund, the issuer would have to refund the subscription amount along with annual interest of 15 per for the delayed period.

However, the issuers issuing tax-free bonds would be exempted from the proposed minimum subscription limit.

Sebi has fixed a base issue size of at least Rs. 100 crore.

Besides, Sebi said issuers would be allowed to retain the over-subscription money up to the maximum of 100 per cent of the base issue size or any lower limit as specified in the offer document.

However, for the issuers filing a shelf prospectus, they can retain over subscription up to the rated size, as specified in their shelf prospectus.

"The issuers of tax free bonds, who have not filed shelf prospectus, the limit for retaining the over subscription shall be the amount, which they are authorised by CBDT to raise in a year or any lower limit, subject to the same being specified in the offer document," Sebi said in a circular.

"Entities coming out with public issue of NCDs shall provide granular disclosures in their offer document, with regards to the 'object of the issue' including the percentage of the issue proceeds earmarked for each of the 'object of the issue'," it said.

Further, the regulator said that amount earmarked for 'general corporate purposes' would not exceed 25 per cent of the amount raised by the issuer in the proposed issue.

Sebi said that NBFCs, which are most frequent users of the debt channel, will have to disclose in their offer document, details with regards to the lending done by them.

Also, NBFCs have to disclose about the issue proceeds of previous public issues including lending policy, details of top ten borrowers including their name, address, exposure etc. and classification of loans given to associates, entities relating to board, senior management and promoters.

The regulator also said issuers coming out with public issues of non-convertible debentures (NCDs) need to make to make additional disclosures in the offer document about provisions relating to fictitious applications, declaration by board of directors that underwriters have sufficient resources to discharge their respective obligations.

Among other information would be utilisation details regarding the previous issues of the issuer as well as the group companies, benefit accruing to promoters/directors out of the object of the issue. The offer document would contain a disclaimer in bold capital letters as specified by Sebi. (NDTV Profit)